After formulating an all-inclusive budget, the government is now eying to streamline the country’s trade with the new Foreign Trade Policy (FTP), which will come into effect on 1 April 2021. The government had extended the existing FTP (2015-2020) for one more year, up to March 31, besides enhancing the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) to aide exporters, especially MSMEs.
New Foreign Trade Policy: Key Components
For the formulation of the new FTP, meetings are being held with stakeholders, with the government inviting inputs and suggestions. Some of the key components are as follows:
Targeting a $5 trillion economy:
A key driver to achieve this mark in an expedited time frame would be boosting exports, both merchandise and services, through systematically addressing domestic and overseas constraints related to the policy, regulatory and operational framework for lowering transactions costs and enhancing ease of doing business.
District-level export growth:
The ‘District Export Hubs Initiative’ will be forming a significant component of the new policy, aiming to help small businesses and farmers explore export opportunities through e-commerce and digital marketing platforms. This includes preparation of export strategy by all states, product and service identification in each district, including mapping of GI (geographical indications) products, constitution of district export promotion panels, preparation of district export action plans and identification of agricultural and toy clusters. As part of the strategy, an institutional mechanism will be set up in each district in the form of district export promotion committees (DEPCs) whose primary function will be to prepare and act on district specific export action plans in collaboration with the relevant stakeholders from the centre, state and districts.
Expectations from The New Foreign Trade Policy
Industry bodies have been brainstorming and voicing their concerns. Here are a few expectations from this policy:
- Include services rendered through augmented reality and virtual reality and other emerging technology in SEIS: New emerging technologies being developed by tech start-ups have a great scope in the international market. The current classification of services does not capture such technologies. The inclusion of these services under SEIS will help promote export of such services from India.
- Export assistance to MSMEs: Besides information on laws and global markets, MSME exporters would need information on credit availability. There is also a need to educate exporters about intellectual property rights, patents, GI, and so on.
- Boosting e-commerce: The new policy should focus on encouraging e-commerce exports by placing specific reference for the inclusion of e-commerce exports by establishment of dedicated e-commerce council. Extending Market Access Initiative (MAI) support to individual e-commerce exporters. Establishment of e-commerce export zones to promote development and growth of MSMEs. Allotting dedicated e-commerce exports clearance lanes for faster clearance of time-sensitive e-commerce export shipments and import-duty exemption for re-import of unsold/returned goods sold through e-commerce exports.